Guggenheim on the Hunt for Deals

The global financial services firm is said to be looking at investment deals in the apparel and digital media sectors.

Global Financial services firm Guggenheim Partners is said to be hunting for investment deals.

Financial sources said the company is casting a wide net to evaluate investment prospects. Those discussions more recently are said to include talks with Juicy Couture cofounders Pamela Skaist-Levy and Gela Nash-Taylor about possibly funding a buyback of the company they sold to Fifth & Pacific for more than $230 million, including the assumption of debt and earn-out payments over several years, in 2003. Fifth & Pacific at the time was known as Liz Claiborne Inc. It couldn’t be determined whether those conversations have led to a bid for the brand, although sources last week said the cofounders were believed to have come up empty in their quest for funding.

Meanwhile, Guggenheim is set to take control of BCBG Max Azria Group, a company it has funded for a decade. The firm already owns most of BCBG’s debt. As reported in February, the fashion house was hitting a critical financial juncture again and Guggenheim was expected at that point to recapitalize its stake and take control of BCBG. Financial sources said then that because of the decade-long investment Guggenheim had in BCBG, Blackstone Group was hired to provide a financial opinion to keep any proposed structure at “arm’s length.” Officially BCBG insisted that Blackstone was advising on strategic alternatives, including other possible investors.

While private equity firms such as Sycamore Partners had been contacted by Blackstone, the word over the weekend was that there really wasn’t anyone interested in investing in BCBG, or even taking over a portion of the Guggenheim debt.

One concern, sources indicated, is over what would happen to the company should founder and designer Max Azria — whose persona is behind the image of his brands — no longer be involved in the firm.

A Guggenheim spokesman said Monday, “Guggenheim is arranging a new investment in a new class of preferred stock in BCBG.” That arrangement isn’t a done deal. Talks are still in progress, and could still break down. A BCBG spokeswoman declined to provide any details on timing, but said a development is expected “shortly.”

The new equity deal, plus the debt Guggenheim already holds — about $475 million of the total $675 million in debt divided into three tranches — would essentially give the financial services firm majority ownership in BCBG, although Azria is likely to retain a small ownership stake and creative control of the brands under its portfolio. Those brands include BCBG, Max Azria and Hervé Léger by Max Azria. Sources said should the Guggenheim transaction get completed, an executive likely will be brought in to run the day-to-day operations and keep a tight grip on the finances.

Headquartered in New York and Chicago, the privately held firm has offices in 20 U.S. cities and in seven countries overseas in Europe, Asia and the Middle East. The firm has more than $180 billion under management.

Its investment banking arm on the West Coast is led by Peter Comisar, who is vice chairman and head of West Coast Investment Banking. The group focuses on the consumer retail and digital e-commerce sectors.

Comisar, experienced in the apparel sector, most recently worked on the True Religion Apparel Inc. sale to TowerBrook Capital Partners in a transaction valued at $835 million, which includes the $220 million in cash that’s on the apparel firm’s balance sheet. True Religion shareholders will vote on the deal later this month. Comisar’s doggedness is credited for getting the deal done, after many months in which naysayers doubted whether there would be any buyers for a brand that is considered still in turnaround mode. Guggenheim also advised Hot Topic in its sale to Sycamore Partners for $600 million.

In New York, it recently added investment banker Adam Rifkin, who was at Barclays. Rifkin will join the New York team in September. In that move, he will rejoin former Barclays colleague Andrew Taussig. Both have experience in the apparel sector on the advisory side.

As for actual investments, besides apparel, Guggenheim in January formed Guggenheim Digital Media, which was set up to acquire and invest in new media firms and properties. Included in its current portfolio of investments is Prometheus Global Media, which controls Billboard, AdWeek and The Hollywood Reporter. The digital media group also manages The Film Expo Group and CLIO Awards, as well as work on the digital media strategies of other Guggenheim investments, such as Dick Clark Productions.

Another high-profile investment of Guggenheim is the Los Angeles Dodgers baseball team, which was acquired in 2012 for $2.15 billion in cash in a consortium led by Guggenheim.

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